CIBIL Score Ranges: What is considered to be the Best CIBIL Score?

India's most prestigious credit bureau is the Credit Information Bureau (India) Limited or CIBIL. The agency is responsible for providing banks and financial institutions with a person’s financial data, such as advances, credit cards, and other investments. The data collected is then used to prepare credit reports containing an individual’s CIBIL score, which financial institutions use to determine loan eligibility.

What Is A CIBIL Score?

CIBIL scores are three-digit numbers that range between 300 and 900. Each individual's CIBIL is calculated based on their credit history, which determines their creditworthiness. Calculating the CIBIL score is based on financial records for the last six months with different variables of varying weights.

How Are CIBIL Credit Reports Generated?

CIBIL considers many factors when generating a credit report.

1. Repayment History

Your repayment history is the most influential factor in generating your CIBIL credit report. Banks, lenders and NBFCs consider borrowers with poor credit histories as risky. Every loan or credit you avail is reported to CIBIL by your lender, and CIBIL receives all your repayment history for that credit.

Regular and timely payments will result in an excellent CIBIL credit report. Failure to repay your debt on time will negatively affect your CIBIL score, irrespective of a credit card or a loan.

2. Credit Utilisation Ratio

Generally, lenders won't extend loans to borrowers with credit utilisation ratios higher than 35%. This ratio plays a role in determining a loan applicant's ability to repay according to income.

When you use your credit card or any other form of credit more than you earn, your CIBIL credit report takes note of such activity. Your credit score falls when you have a high debt-to-income ratio.

3. Multiple Credit

When you apply for a loan or a credit card, your lender reviews your CIBIL credit report. The more loans you have, the lower your CIBIL credit score. Hence, you should pay off your existing loan before applying for a new one to boost your CIBIL credit score.

4. Loan Enquiries

Making repeated inquiries about loans may indicate that you are hungry for credit, negatively affecting your credit score.

5. Credit Cards

Credit card usage also affects credit scores. A high credit card balance demonstrates poor spending behaviour, creating a poor credit score for the borrower.

6. Secured v/s Unsecured Loans

The risk of a lower credit score increases if you take multiple unsecured loans. Likewise, your credit score will increase if you repay secured loans on time.

What Is CIBIL Score Range?

CIBIL scores range from 300 to 900, with 900 considered the highest. Each bank requires a different CIBIL score for various products. Banks and financial institutions consider a CIBIL score of 650 or higher ideal.

Understanding Different CIBIL Score Ranges

The different CIBIL ranges are as follows.

• NA/NH

Borrowers without a credit history will have an NA/NH score, which stands for "no history" or "not applicable". It indicates no debt or using a credit card. To establish a credit history and avail of a loan in the future, you can take a credit card.

• 300-599

CIBIL scores between 300-599 are considered poor. Borrowers who did not pay off loans and credit cards on time have credit scores between these ranges. It means you have unpaid credit card bills or EMIs.

Getting a loan or a credit card will be challenging if your CIBIL score falls in this range, as you are at high risk of defaulting.

• 550-649

Your chances of getting approved for a loan are slim if your credit score is between 550-649. A credit score in this range is considered fair, but most lenders won’t give credit to people with this score range. This range may also carry comparatively higher interest rates from financial institutions. The borrowers may have a CIBIL score in this range if they fail to pay their credit card bills and loan repayments on time.

• 650-749

This range of credit scores is considered good. Such a positive score indicates good credit behaviour to financial institutions, and a loan application may be approved quickly. Despite this, some lenders may still charge high-interest rates.

• 750-900

If the borrowers pay all their credit card dues and loans on time, their credit score ranges from 750 to 900. CIBIL scores in this range are considered excellent. An applicant with this credit score has a greater chance of getting approved for a loan at the best interest rate.  Discover how to achieve a high credit score and explore if a 900 credit score is possible.

How will your Credit Score impact your Loan Borrowing Process?

Your credit score plays a vital role in the loan borrowing process. It acts as a report card for lenders, reflecting your past financial behavior and creditworthiness. Here's how your credit score range impacts your loan application:

1. Loan Approval: A high credit score (typically above 750) significantly increases your chances of loan approval. Lenders view you as a reliable borrower, making them more comfortable offering you a loan.
2. Interest Rates: Your credit score directly influences the interest rate offered on your loan. A good credit score (generally above 700) qualifies you for lower interest rates, saving you money in the long run.
3. Loan Terms: A strong credit score (above 650) can lead to more favorable loan terms, such as longer repayment periods or lower down payments.
4. Loan Amount: With a high credit score, you may be eligible for larger loan amounts compared to borrowers with lower scores.

Maintaining a good CIBIL score is crucial for a smooth loan borrowing experience. It unlocks access to better loan options, saving you money and giving you greater financial flexibility.

CIBIL Score Ranges: How to Compare different Ranges

The CIBIL score, ranging from 300 to 900, is a key indicator of your creditworthiness. It helps lenders assess your credit risk (likelihood of repaying loans). Here's a breakdown of the CIBIL score ranges:

• Above 750: Excellent - This signifies a strong credit history, making it easier to secure loans and credit cards at favorable terms.
• 700-749: Good - Represents a healthy credit profile, generally leading to loan approvals with ease.
• 650-699: Fair—While you can still qualify for loans and credit cards, you might need to improve to secure better interest rates.
• 600-649: Low - This range indicates a higher credit risk for lenders, potentially leading to stricter loan terms or rejections.
• Below 600: Needs Improvement - This score might result in loan rejections or unfavorable terms. Consider taking steps to rebuild your credit score.

How to Improve your Credit Score Gradually

Your CIBIL score, a creditworthiness indicator ranging from 300 to 900, significantly impacts your financial well-being. Here's how to gradually improve it:

1. Pay Bills on Time: This is paramount. Timely payments on loans, credit cards, and other bills positively affect your CIBIL score (ideally above 700 for a good score).
2. Manage Credit Utilization: Keep your credit card balances low. Aim for a credit utilization ratio (outstanding balance divided by credit limit) below 30%. This demonstrates responsible credit management.
3. Review Credit Report Regularly: Obtain your free CIBIL report to identify any errors. Dispute errors promptly to ensure a fair credit score reflection.
4. Build Credit History: If you have limited credit history, consider a secured credit card. Use it responsibly and pay bills on time to establish a positive track record.
5. Maintain a Credit Mix: Having a healthy mix of credit types, like a secured loan and a credit card, can positively impact your CIBIL score graph. However, manage them responsibly to avoid overextending yourself.

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Frequently Asked Questions

Q1. What CIBIL score do financial institutions consider a good one?
Ans. A CIBIL score over 750 is ideal and appropriate for various lending institutions.

Q2. How can you correct any mistakes in your CIBIL report?
Ans. If you find any errors in your credit report, contact CIBIL at info@cibil.com. The bureau will review your request and correct any errors.

Q3. What is a good credit score range?

A good credit score range generally falls between 670 and 739. This indicates a healthy credit history and makes it easier to get loan approvals and potentially secure favorable interest rates. Scores above 740 are considered very good, and anything above 800 is excellent, offering the borrower the most advantageous loan terms.

Q4. What are the 5 levels of credit scores?

Credit scores are typically divided into 5 levels, reflecting your creditworthiness:

• Exceptional (800-850): This top tier signifies a borrower with a nearly flawless credit history. You'll enjoy easy loan approvals and the best interest rates.
• Very Good (740-799): This range indicates a strong credit profile. You'll likely qualify for favorable loan terms and competitive interest rates.
• Good (670-739): This is a healthy credit score range, allowing for easy loan approvals and potentially good interest rates.
• Fair (580-669): While you can still qualify for loans and credit cards, this score might lead to higher interest rates or stricter terms.
• Poor (Below 580): This range suggests a high credit risk. Loan approvals may be difficult, and if approved, you'll likely face unfavorable interest rates and terms.

Q5. What is a good credit score for my age?

While there's an average credit score for different age groups, it's not the best measure. Generally, a good credit score is considered above 670. However, focus on building your credit history responsibly. Here's why:

• Younger individuals might have a shorter credit history, naturally affecting the score.
• Consistent on-time payments and responsible credit management are key to building a good score over time.

Building a strong foundation now will benefit you greatly in the future, unlocking better loan options and interest rates.

Q6. Can anyone have 900 CIBIL score?

Achieving a perfect 900 CIBIL score is very rare. It signifies an excellent credit history, with factors like:

• Always paying bills on time, for years.
• Maintaining a low credit utilization ratio (owing little compared to credit limit).
• Having a healthy mix of credit types (loans and credit cards) managed responsibly.

While uncommon, anyone can strive for a near-perfect score through consistent responsible credit management. Scores above 750 are considered excellent and offer significant benefits. Focus on building a strong score for a brighter financial future.